Correlation Between Solo Brands and KB Home
Can any of the company-specific risk be diversified away by investing in both Solo Brands and KB Home at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Solo Brands and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and KB Home, you can compare the effects of market volatilities on Solo Brands and KB Home and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Solo Brands with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and KB Home.
Diversification Opportunities for Solo Brands and KB Home
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solo and KBH is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Solo Brands is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Solo Brands are associated (or correlated) with KB Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Home has no effect on the direction of Solo Brands i.e., Solo Brands and KB Home go up and down completely randomly.
Pair Corralation between Solo Brands and KB Home
Considering the 90-day investment horizon Solo Brands is expected to under-perform the KB Home. In addition to that, Solo Brands is 2.33 times more volatile than KB Home. It trades about 0.0 of its total potential returns per unit of risk. KB Home is currently generating about 0.13 per unit of volatility. If you would invest 7,812 in KB Home on August 31, 2024 and sell it today you would earn a total of 474.00 from holding KB Home or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solo Brands vs. KB Home
Performance |
| Timeline |
| Solo Brands |
| KB Home |
Solo Brands and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and KB Home
The main advantage of trading using opposite Solo Brands and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands position performs unexpectedly, KB Home can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KB Home will offset losses from the drop in KB Home's long position.| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc |
| KB Home vs. Century Communities | KB Home vs. Dream Finders Homes | KB Home vs. DR Horton | KB Home vs. Everus Construction Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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